Three Reasons Why HealthSpot Died

HealthSpot kiosk in RiteAid

HealthSpot, the poster child for telemedicine kiosks has suddenly and abruptly shut down. Its fall is rather poignant considering its much touted partnerships with big guns such as RiteAid, Kaiser Permanente, and Cleveland Clinic. HealthSpot brought in a hefty $43.8 million in venture capital and debt financing between July 2011 and January 2015 with its vision of establish self-serve telemedicine kiosks all over the US.  It was backed by investors such as Xerox. There’s been no sound from HealthSpot or its investors so far.

Where Did HealthSpot Go Wrong?

Although everyone is wondering why Healthspot failed, I don’t think it’s a signal for the end of telemedicine. American Well CEO, Roy Schoenberg has pointed out that American Well also owns telemedicine kiosks, which are doing quite well. He surmises that HealthSpot’s failure was due to its work model. HealthSpot kiosks only allowed for scheduled visits between patients and doctors and did not provide the convenience of true on-demand health. I completely agree with Roy, and would go so far as to say that it is the number one reason why HealthSpot failed.  

Doing Telemedicine on the Cheap

The second reason it failed is that it was spending too much.  For one, it picked Vidyo for telemedicine.  Vidyo is not only expensive, but it requires infrastructure that forced HealthSpot to have to maintain farms of servers and IT staff to keep it going.  Secondly, the overall HealthSpot kiosk, while beautiful, was overkill for what is actually needed.  Based on data from VSee kiosk customers, a typical HealthSpot location may expect about 10 patients a day even after it becomes fully on-demand (this is on top of scheduled appointments).  At 10 patients a day, there’s simply not enough cash inflow to justify the expense of a fully equipped HealthSpot kiosk.  In contrast, VSee customers use a do-it-yourself approach to setting up a kiosk, where they can create a HealthSpot-like experience for a small fraction of the cost. (You can check out my Urgent Care Telemedicine Tips slideshow for ideas on how to do this.)

The third reason HealthSpot failed is that its target market is too small. Specifically, it could not compete with urgent care centers. HealthSpot occupies a narrow market segment of people who have minor illnesses but still have to go somewhere to get medical attention. However, since it does not provide as wide a range of services as an urgent care center, the actual reasons to go there is rather limited.

In spite of HealthSpot’s inauspicious demise, I’m still optimistic about the future of telemedicine and believe that we are on our way to making it a part of our everyday life and healthcare system.  Here’s to VSee, MDLIVE, American Well, Teladoc, Doctor-on-Demand and the many others out there making telemedicine work in 2016!

Comments ( 8 )
  • milton
    Paul Robichaux says:

    At 10 patients a day, your costs have to be incredibly low as you mentioned. Most likely why they did not do the on-demand model is that you have to employ a healthcare provider full-time. At that rate, you have to essentially have a healthcare provider managing multiple kiosks simultaneously. Naturally, the issue becomes keeping that practitioner busy but not so busy that there are wait-times. At the end of the day, I think you hit the nail on the head when you point out that they had a ton of technology to handle sophisticated cases that were probably better managed at urgent care. And the simple cases didn’t justify all the technology they support.

  • milton
    Darius Jones says:

    Your article is very interesting as you view Healthspot’s failures to spending too much and elude to choosing Vidyo as a failure; however you failed to mention in referencing American Well their success is based on Vidyo as their solution is powered by Vidyo. Healthspot’s failures are attributed to scheduling verses true on-demand, loss of tacit knowledge due to turnover in the organization, and failure to capitalize on growth in stronger markets.

  • milton
    Wayne Caswell says:

    As digital health sensor & imaging devices keep getting smaller, cheaper, more accurate, and easier to use, they naturally moved down-market to consumers wherever they are, bypassing the need for retail clinics altogether, except for things like getting shots. The video call with a GP or specialist can just as easily happen from a phone or tablet as a kiosk.

  • milton
    anne says:

    Dr. Chen and VSee have always had the highest regard for the quality of Vidyo’s products and performance. You can read our review here. The point is that Healthspot was overspending unnecessarily – on big beautiful (expensive) kiosks, on a video solution that intrinsically requires a big investment on infrastructure and IT personnel, and on who knows what else.

  • milton
    Essie says:

    Healthspot is a representation of telehealth and personal healthcare. It is supposed to have the tools to empower any healthcare provider or specialist to provide higher-quality care. They once aimed to make things smarter, simpler, and easily accessible. The idea was there but with most great ideas, they overlooked the important things for the business. It is too bad that they lacked in planning. HealthSpot is now selling assets after bankruptcy, the news said.

  • milton
    Tammy says:

    Hi there- one clarification about HealthSpot

    Your first point isn’t correct. Visits with a medical provider did not have to be scheduled. The provider network that existed among healthcare partners ensured that a provider was always available to see patients. There were a few instances perhaps when a provider wasn’t available, but very few patient visits were scheduled visits.

    Thanks

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